Sales Memorandum

WZY Cleaning Services, LLC

Proprietor's name(s)

Joseph Blygges and Lizzie Blygges

Contact details

Disclaimer
WZY Cleaning Services and all the characters referred to in this document are fictitious. Any resemblance to actual business in New York State (or anywhere else in the US), or to real-life persons, is purely coincidental.

Summary

Business main location

Albany

New York

United States

What the business does

Specialist fabric cleaners for both home and office markets focused on New York State. Carpet, furniture, curtain fabrics and more recently repair and polishing of wooden and parquet flooring.

Category

Carpet cleaning

Company website

Year established and history

Established in 1997.
100% owned by Joseph and Lizzie Blygges (50% each).

Why the business is an attractive proposition to a buyer

Profitable, long-established specialist fabric and floor cleaners with a combined database of over 4,000 office and home customers. WZY has earned an enviable reputation as the experts in restoring fabrics to their former glory. Few tricky stains can resist the WZY treatment as long as the call-out is made promptly. Growth investments, funded mainly from re-invested profits, include the latest environmental-friendly cleaning equipment, and a new operations center in Kingston.

Reason for selling

Both now aged over 60, it's time to retire, sell-up and move to Florida to enjoy the sunshine and spend more time with the grandchildren.

Independency on the present owner

The business is already prepared for the change of ownership. Customer relations, contracts, technical blueprints, and other key information is well documented. The staff members are trained to manage all operations without the present owner's supervision.

Brief business highlights

Product or service

Specialist on-site fabric cleaners and wooden floor polishing and restoration. A combination of scheduled jobs and emergency call-outs to treat recent spillages and stains.

Customer profile

WZY has built a loyal, diversified customer base of home and business customers. In Albany, sales value is similar for both customer types, although there are fewer, higher-value jobs in the business market. By contrast, Kingston branch sales revenue is heavily weighted towards domestic customers. An opportunity exists to develop the office market in Kingston, particularly for 30+ staff sites, although entrenched competition makes winning new business a challenge. Typical domestic customers have a household income exceeding $100,000.

Sales channels used

The website is a key channel particularly now that it takes online bookings. Joseph Blygges fulfills sales appointments with local businesses, supported by office email campaigns and telephone follow-up. Partnering is stronger now with the new "Customer Care" initiative. WZY applies onsite stain-resistant treatments to newly fitted furnishings, with the retailer/wholesaler receiving a share of WZY's margin on the job.

Key market facts

The carpet and upholstery cleaning market has grown by circa. 5% over the past five years. Tough economic times have restricted spending on new items, with homes and businesses choosing to clean rather than replace carpets and furniture/upholstery. Over the past five years, WZY has surveyed future customer intentions, which consistently highlight a preference for wooden or parquet flooring when households decide to replace carpets. This research underpinned the decision to launch the wooden floor polishing and restoration service, in order to preserve WZY's long term market position.

Main promotional methods

Strong word-of-mouth referrals from satisfied customers have been a major contributor to profitable growth over time, enabling promotional spend to remain at circa. $50,000 p.a. Local brand awareness is the result of sustained local newspaper advertising and print/online classified ads. Social media activity is building an important following through weekly news and information blogs posted on the website, Facebook page, Twitter, Google Plus and Linked-in.

The value proposition

WZY provides specialist floor polishing and restoration services that stand out with high-quality of the services rendered, as well as reasonable pricing.

The main advantage(s) over nearest competitors

Competitors have yet to replicate WZY's expertise in the rapid assessment of job requirements, selection of the right cleaning materials, and effective application of chemicals using the most efficient equipment. A two-year guarantee offer on all stain-resistant treatments reflects confidence gained from consistently high performance. The trend towards environmentally-conscious consumers aligns closely with company core values. WZY has always used top-grade, environmentally-friendly chemicals, and energy-efficient methods. A price premium of up to 20% over the competition is common.

Number of employees, full time: 9

Number of employees, part-time: 5

Key financial facts and forecast

Owner/Director discretionary expenditure has been added back to free cash flow to arrive at the final valuation. Forecast compound sales growth rate of 3% is consistent with historic market trends and takes account of Kingston's potential to expand, and the shift towards wooden floor polishing and restoration.

Staffing

Albany: 3 full-time onsite cleaning specialists; 1 full-time & 1 part-time office administrator, 1 full-time & 1 part-time customer service coordinator
Kingston: 1 full-time & 2 part-time onsite cleaning specialists; 1 full-time administrator; 1 full-time customer service
Joseph Blygges full-time management and sales, Lizzie Blygges part-time book-keeper.

Price and terms

Asking price

$320,000

Minimum 50% of asking price required in cash on deal completion.

Owner financing

Owner financing is available.

Owner financing terms

Funding amount: up to 50% of the purchase price. Term length: 5-6 years. Repayment schedule: monthly.

Transition of business ownership

WZY's business proposition is built on proprietary knowledge of cleaning chemicals and their effectiveness on fabrics. The owners agree to transfer this knowledge through ten days of intensive training, chargeable at a consultancy rate of $1,000 per day. To smooth transition to new ownership, Joseph Blygges is willing to provide the business with two days per week of consultancy services for up to six months following deal conclusion, at $1,000 per day.

Required buyer qualifications

A buyer must have $180,000 dollars in cash on deal completion, $38,000 of which is to be deposited in an escrow deposit account. A suitable buyer will demonstrate solid managerial experience, ideally in cleaning-related services or relevant experience in applying chemicals. A background in sales and marketing would be helpful in realizing business growth potential.

Type of business sale

Joseph and Lizzie Blygges seek a 100% transfer of ownership through a share sale.

Terms of sale

Nothing special, really. We are expecting to meet a serious and financially capable buyer. See the seller financing terms above.

Future developments

The main business opportunities

The Kingston branch has the potential to increase sales by 50% with investment in Marketing, particularly to businesses that are under-represented in the current customer mix, when compared with Albany. With consumer environmental-consciousness growing, there's a real emerging opportunity for WZY to further capitalize on its environmentally-friendly credentials in cleaning equipment, materials and methods.

The challenges and risk

The US recession causing a general "clean, mend and repair" mindset has benefitted WZY's business. By contrast, a recovering economy may impact adversely on traditional cleaning businesses. WZY's wooden floor repair and polishing service has the potential to grow significantly to compensate for any loss of traditional business but will require additional promotion to compete with more established players.

New or emerging competitors

WZY's premium pricing policy has naturally alerted existing competition. Without specialist chemical knowledge and skills, it's been hard for competitors to match WZY's restoration prowess and price advantage. A new competitor, Enviroclean, has recently opened in Kingston. Run by a chemistry graduate, Enviroclean has invested in the latest equipment and is trying to entice customers to switch with generous introductory discounts to win market share.

Improvement actions already taken

Continual improvement is key to WZY staying ahead of the game. This imperative is formalized in quarterly business reviews, involving all staff, which check performance against target and assess ways to improve the service. These reviews have seen several positive changes agreed and implemented, including online customer booking, use of post-job customer satisfaction forms, and sharing lessons learned from particularly tricky assignments. The wood and parquet floor polish and repair service was first suggested here, enhancing the range of flooring services, and helping to prevent competitors from luring away existing customers.

Appendices

Expected schedule of the business sale process, attached.

• The Schedule of Business Sale
• Presentation

DocumentID: 02/08/2023 01:20:01.681